Us Will Not Tolerate Online Gaming

ALTHOUGH the future of a web shop industry for the Bahamas remains locked in the bosom of the courts, we suggest to Tourism Minister Obie Wilchcombe that he should not depend too heavily on American tourists becoming involved in the game of the dice. One look at what’s happening between the US and the twin island nation of Antigua and Barbuda should cool Mr Wilchcombe’s ardour about getting Americans involved.

The US and Antigua-Barbuda have been battling since 2003 over whether the US can effectively keep citizens from gambling on Antigua’s internet gaming sites. The US has blocked Antigua’s various sites, including Sports Exchange. Eventually, Antigua took its case to the World Trade Organisation (WTO). In 2005, WTO ruled that the US’s decision to block Antigua’s sites violated free trade as its own domestic sites remained operational on the mainland.

The US ignored the ruling. “The refusal,” wrote a blogger, “brought big changes to the island’s economy; five per cent of the citizens once worked in the high-tech internet gambling industry – now they were left looking for jobs.”

Eventually in 2007, WTO gave Antigua permission to suspend payment of $21 million that it owed to the US in copyright payments. Antigua threatened to open a site that would bootleg US copyright works — such as films and other merchandise sold on the island — at a discounted rate that would be paid into its own Treasury as compensation for its gaming loss. The US has accused Antigua of “intellectual property theft.” The trade battle between the mighty USA and the tiny Caribbean island — a David and Goliath struggle —continues.

“The business of online gambling spans the globe and touches every corner of the United States,” wrote David O Stewart of Ropes & Gray, LLP, in a commentary on the American Gaming Association’s White Paper – “Online Gambling Five years after UIGEA.”

“Worldwide,” wrote Stewart, “online gambling is increasingly a legal and regulated activity that generates almost $30 billion of revenue a year. In the United States, public policy on the subject has been schizophrenic. Online gambling is presently being conducted domestically for pari-mutuel betting on horse races and for state lotteries, yet government policy has been hostile to other forms of online gambling, and has included criminal prosecutions of online gambling operators and their payment processing partners. Despite this government opposition, millions of Americans spend $4 billion every year to gamble online. Prosecutions against online gambling operators have driven the more responsible offshore operators out of the U.S. market, leaving Americans to conduct their online gambling through largely unregulated websites.

“Numerous Western nations — including the United Kingdom, France, Italy, and some provinces in Canada — have created structures for tight regulation of the online gambling industry. This course provides consumer protections for individuals while also generating jobs, economic opportunity and government revenue.“

According to Mr Wilchcombe — that is before the web shop referendum was defeated by a resounding “No” from the public — tourists would “absolutely” be able to purchase lotto tickets and pay numbers in addition to casino gambling. Provided that they did so in the Bahamas, there would be no way that the US could stop them, but to go online — well, obviously that would be a different matter.

“Well if they (Americans) come here, we’re talking about 3 to 5 million tourists who can buy lottery tickets. And in fact, they can buy webshop numbers as well because its open to everyone. It’s not restrictive,” declared a confident Mr Wilchcombe.

“We are using every medium possible,” said Mr Wilchcombe. “We will use the media, the newspapers, radio and social network as well as Bahamas Information Services to get the information out there,” he said. We suggest that, should the web shops be approved, Mr Wilchcombe would be well advised to be careful how far out there he takes his gambling message. If he trespasses on Uncle Sam’s shores, he might be grabbed by the seat of his pants and tossed back to the Bahamas.

As for Antigua, which is forging ahead to collect its $21 million in compensation for the loss of its gaming revenue, the US has warned:

“In these circumstances, Antigua has no justification for taking any retaliatory actions against the United States. Moreover, if Antigua actually proceeds with a plan for its government to authorise the theft of intellectual property, it would only serve to hurt Antigua’s own interests. Government-authorised piracy would undermine chances for a settlement that would provide real benefits to Antigua. It also would serve as a major impediment to foreign investment in the Antiguan economy, particularly in high-tech industries.”

So far, gaming for the Bahamas has not been settled. But, we suggest, that should it go forward Mr Wilchcombe should not whistle too loudly for the Americans to join him at the roulette wheel.

Comments

I suspect there is not a direct correlation between Antigua & Barbuda's historic experience and The Bahamas possible future experience. Antigua's WTO case was commenced at a time when US online gambling was principally lotteries (gaming) and horse race betting (wagering).

The US DoJ had a long standing opinion that all cross border online gambling was illegal. I understand the UIGEA targeted financial institutions, not gambling businesses and it is unclear that regulations adequately define what an unlawful interactive gambling activity is. Financial institutions have simply been persuaded that it's all a bit too hard for the time being.

Since the WTO decision in Antigua's favour and the UIGEA, the US DoJ has issued an amended opinion that the Wire Act only relates to wagering (whereas it had previously stated a view that it related to all gambling). Probably as a result of that opinion by th DoJ several US States have aggressively introduced online gaming laws (laws of course further enable online gaming) - New Jersey being the closest and most obvious example.

So in summary the USA has signed a GATS treaty allowing online gambling services and its states have moved to further enable online gambling to its citizens. Until such time as regulations pursuant to the UIGEA make legalised online gaming based offshore (say The Bahamas) as unlawful then it is just fear of the unknown for financial institutions. However, as these financial institutions start to recognise online gambling as lawful, on the back of US state based online gambling, then there's renewed opportunities for offshore jurisdictions with properly licensed and regulated sectors.

The Constitution of the Commonwealth of the Bahamas Chapter III – Protection of Fundamental Rights and Freedom of the Individual. Section 26 Protection from Discrimination on grounds of Race, Place of Origin etc.

The Bahamas Gaming Association stands by the Ideology that all human beings who are 18 years or older should be treated equally in all sectors of the Bahamian Economy which is enshrined in the Constitution of the Commonwealth of the Bahamas.